The Kenai City Council turned down a proposed $11,700 land sale, sending the message that the city's land will not be sold at fire sale prices despite the slow real estate market.
The deal with Homer resident Harold Dusenbery was negotiated by City Manager Rick Ross for a parcel in the Inlet Woods Subdivision. The land has a market value of $13,000, but the sale included a 10 percent discount for cash. City code allows the city manager to give such a discount, subject to council approval.
Council member Joe Moore argued against the sale, saying its affect on others in the subdivision would be detrimental.
"Thank you for decreasing my property value," said Moore, who lives in Inlet Woods. "I'd be interested to see if it's reflected in the valuations when they come out."
He later said it may have been in his own best interest to vote no, but pointed out that he represents everybody else who lives in that subdivision.
He also said that such bargains would set a benchmark for sales whether they are financed or for cash.
Mayor John Williams agreed.
"This will subtract from property values," he said.
He acknowledged there was a slump in the real estate market, but said that was no reason to give such discounts.
"I plead with the council not to give away land," Williams said. "We've put $3 million into Inlet Woods, and I would rather not give it away."
The city acquired the subdivision on the north side of Redoubt Avenue after 10 years of litigation with the developers. The mayor has described it as the longest and most costly lawsuit the city has ever been involved with.
Williams said real estate was a long-term investment, and speculated that future events on the Kenai Peninsula would create a demand for all vacant lots in the city.
The city has had just a few inquiries into the land at Inlet Woods, and only one offer, from Dusenbery, since it was opened for sale in June.
That slow state of affairs prompted council member Duane Bannock to profess his reluctant support for the sale.
"We have to do something," he said.
In the end, the council turned down the proposed sale on a 2-6 vote at Wednesday's council meeting, with Bannock and council member Bill Frazer voting in favor. Williams, Moore and council members Pat Porter and Linda Swarner voted no. Council member Jim Bookey was absent.
Dusenbery was unavailable for comment.
In other real estate related news, the council fielded a request by Jim and Diana Zirul to install a new fire hydrant near the clinic they are building.
Jim Zirul is an ear, nose and throat doctor, whose office is currently in the Tangent Building in Kenai. The new clinic is at the corner of Frontage Road and Spur View Drive, between Leif Hansen Memorial Park and the Kenai Senior Center. The Ziruls bought the property earlier this year for $100,500, according to city records.
A new hydrant is needed in the area because city fire and building codes require more fire-fighting water than is available from the one nearby hydrant.
There were two options put before the council: to install a hydrant on the senior center side of the new clinic for $4,500, or install a new one at the corner of Frontage Road and Spur View Drive for $16,450. The council chose the latter option.
"This is a perfect example of how we can help ourselves," Bannock said. "Providing roads and hydrants, that's what (the city) does."
He said the city is not really giving away the hydrant, as it will be able to serve the back portion of the Spur View Plaza shopping center and any new development on property nearby.
Bannock was so passionate about the plan that he drew a map on the whiteboard for the rest of the council.
"We are really fronting ourselves this $16,000 by increasing property values," Bannock said. "And it's prime for Millennium Square."
Millennium Square is the name of Mayor Williams' development plan for the old FAA/Daubenspeck property on the other side of Spur View Drive.
Williams pointed out that the city paid for hydrants along the Kenai Spur Highway in front of the Three Bears and McDonald's area.
"(And) the city offered to pay for water and sewer for Carrs and (Big) Kmart," he said.
He also referred back to the debate on the Inlet Woods lot sale earlier in the evening.
"We spent millions to bring water and sewer into lots that we were going to give away at less than market value," he said. "In this particular instance, it's my opinion to install (the hydrant)."
Porter initially expressed skepticism over the city paying for the hydrant, but was swayed after the debate.
"I want you to know that I changed my mind," she said to the Ziruls.
The motion to pay for the installation of the hydrant passed unanimously.
The council also released Halliburton Energy Services from leases on two properties in the Cook Inlet Industrial Air Park with little debate. The lots are near the intersection of Airport Way and Trading Bay Road.
The leases, which were signed in 1967, would have expired in 2022, but Halliburton, an international oil field service company, offered $60,000 to be released. That price is about the equivalent of five years of lease payments.
City Attorney Cary Graves said the Federal Trade Commission is putting pressure on Halliburton to divest itself of properties it no longer uses. He said the company will remain responsible for any clean up needed at the site.
The next Kenai City Council meeting is scheduled for Sept. 6.
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